Crude focus of deadly railway crash, but far more chemicals transported by rail

MONTREAL – The explosive railway crash in Lac Megantic, Que., has put the focus on the growing transportation of crude oil, but far more hazardous materials, including dangerous chemical compounds, are transported near Canadian communities.

Canadian railway companies shipped 86,000 carloads of petroleum products in the second quarter, up 18 per cent from last year and 62 per cent from 2011.

But railways transported 154,000 carloads of chemicals during the recent period, 79 per cent more than the material that forever changed a small Quebec town.

Fifteen people have been confirmed dead and about 60 are missing following Saturday’s early morning derailment, explosions and fire that devastated parts of the town.

Cameron Doerksen of National Bank Financial says some of these chemicals are even more dangerous than crude, which has come under increased scrutiny about the safety of hauling such material by rail.

Any movement to limit the shipments of crude by rail would also hit the transportation of chemicals and create a potentially more dangerous alternative of transporting the materials by truck, he said.

Doerksen says transporting hazardous materials by rail is not perfect, but it is generally safe.

The Lac Megantic disaster could prompt additional safety measures, including regulations to upgrade tank cars to more modern standards. Tank cars used in hauling crude are generally owned by oil producers and refiners, not the railways.

However, Doerksen said he doesn’t expect new safety regulations will be overly burdensome to the country’s two largest railways — Canadian National (TSX:CNR) and Canadian Pacific (TSX:CP). Incremental costs could be recovered by higher pricing.

While transportation of crude by rail is the fastest growing segment for both railways, he said it will represent only three to five per cent of CN’s revenues by year end and seven to 10 per cent of CP revenues.